Venezuela's Bolivarian National Guard seized a Guyanese fuel smuggling ship in the eastern Venezuelan municipality of Caroni on Oct. 23. On Oct. 15, it intercepted a Trinidadian fishing vessel allegedly operating in Venezuelan waters. And on Oct. 10, it seized the Panama-flagged Teknik Perdana oil exploration ship, which reportedly was operating in disputed waters on behalf of U.S. oil company Anadarko. Whether in the Suez Canal or the South China Sea, such interventions in maritime activity by a regional power frequently pique the interest of global players. Unlike Suez, this corner of the world has little relevance to global shipping. But like the South China Sea, it may have substantial oil and natural gas resources, something that will fuel a territorial dispute that has already lasted a century.
The seizure of the offshore energy exploration ship working for Anadarko touched on the most important issue in the recent naval activity — namely, Venezuela's relationship with Guyana. The two neighbors have had a territorial dispute since shortly after Venezuela emerged as an independent state in 1830. The territory in question — roughly half of Guyana's territory — had by some accounts traded hands among various colonial powers several times in the preceding centuries. It came under firm British control in the mid-19th century following a British treaty with the Netherlands.
In 1841, the British officially demarcated the western border of the territory as extending to the mouth of the Orinoco River, prompting an immediate Venezuelan outcry. The dispute was settled — and the current borders established — in an 1899 treaty. The dispute re-emerged in 1949 when allegations arose that the British had used undue influence in the negotiations that resulted in the treaty. Venezuela continues to claim all Guyana west of the Essequibo River, or about 60 percent of Guyana's land.
The dispute remained largely quiescent for the past decade, despite occasional flare-ups. Late Venezuelan President Hugo Chavez largely left the issue alone, preferring instead to draw Guyana into Petrocaribe, an oil alliance between Venezuela and several Caribbean states facilitating the purchase of Venezuelan oil on advantageous terms. The Venezuelan political opposition criticized Chavez, who had plenty of domestic concerns to contend with, for not pursuing claims to the territory, which has significant proven gold reserves as well as potential natural gas and oil reserves west of the Essequibo and offshore.
Since Chavez's death, Venezuelan President Nicolas Maduro's government apparently has decided to change course. The seizure of the Teknik Perdana is by far the strongest indicator of this shift. In the wake of the incident, unnamed sources told Guyanese newspaper Stabroek News that it is unlikely that Anadarko will be able to continue exploring the Roraima block, where the Teknik Perdana was seized. The leaked statement seems credible, since the entire western portion of Guyana's offshore oil blocks — including a block where supermajors Exxon and Shell have leases, though they do not appear to have committed much in the way of resources there to this point — is in a maritime zone subject to dispute based on Venezuela's claims to western Guyana. An escalation of bilateral tensions coupled with a failure to resolve the dispute would likely mean a freeze on the oil companies' ability to work in the area and less revenue for the small South American state.
Aggravating Regional Tensions
As a party to the U.N. Convention on the Law of the Sea, Guyana has a maritime territory that extends 200 nautical miles from the shore that makes up its exclusive economic zone. In 2012, Guyana filed for an extension of its territorial waters to what it claims is the end of its continental shelf, a line nearly 400 nautical miles off its coast. At the same time, Guyana announced in mid-2012 that it was awarding the Roraima block to Anadarko for exploration. It ignored Venezuela's claim to the Essequibo in its maritime claims and in the auctioning off of the oil blocks therein.
However, Venezuela, is not a party to the treaty, and its maritime boundaries have not been established under the international law. Moreover, as Guyana announced its application for extending its maritime territory and the award of the Roraima block, Chavez was suffering from cancer and was attempting to orchestrate a managed regime transition. This muted anger toward Guyana's actions in Venezuela at the time. Now, media reports maintain that the Maduro administration has come under pressure from the Venezuelan navy to enforce the country's maritime claims more strictly.
Though Guyana holds neither onshore nor offshore oil and natural gas reserves, recent offshore exploration in neighboring Suriname have yielded proven reserves of 70 million barrels, and the geology of the northeast coast of South America resembles that of promising geology off the coast of West Africa, including Ghana. It is also adjacent to the prolific natural gas fields of Trinidad and Tobago. As a result, the Suriname-Guyana basin has generated some excitement in the world of frontier energy plays for the past several years. Though Venezuela has a limited ability in the short term to increase its offshore investments, it can leverage its long-standing territorial disputes to seek concessions from Guyana.
A special representative from the United Nations is currently mediating the dispute. Venezuelan Foreign Minister Elias Jaua and Guyanese Foreign Minister Carolyn Rodrigues-Birkett also met Oct. 17 in Trinidad and Tobago to discuss the matter. Though they agreed to establish a mediation mechanism within the next four months, the dispute probably will not be resolved anytime soon. Venezuela is in a period of political instability following Chavez's death, and Maduro appears to be playing a careful balancing act between the power of the military and his own support base. With economic pressure on him mounting, the situation in Venezuela is volatile. And in much as nationalism plays a role in periodic confrontation in the South China Sea, Venezuela's domestic political instability may continue to aggravate regional tensions.